After falling three months in a row, new orders for furniture recovered slightly in May, increasing 2% over the prior-year month. That’s according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard.

The decline in orders from 2015 had been 3% in April, 2 percent in March and 1% in February.

“This month’s increase was certainly not across the board as there were wide swings in individual participant results with about half reporting increases,” said Smith Leonard Managing Partner Ken Smith in the report. “Last month, 69% (of respondents) reported decreases from the prior year.”

While new orders remain about the same compared with the same five-month period a year ago, results continue to vary among survey participants.

“Some 61% of our participants reported lower orders year-to-date, again with large swings in reported results,” Smith said.

Shipments fell 1% in May 2016 versus May 2015, but were up 6% from April, when shipments were down 3% in April versus April 2015. In May, shipments were lower for some 58% of the participants.

“The decline in shipments in both months was the result of the declining orders in the months prior to May,” Smith said.

Year-to-date shipments and orders were even with the same period a year ago. About half of the participants reported increased shipments year-to-date. Backlogs were up 2% from April as orders exceeded shipments, but were down 6% from May 2015 – versus a 7% decline reported last month.

“The change in backlogs resulted from shipments year-to-date exceeding new orders resulting in the decline,” Smith said.

Receivable levels were about even with April results but were 5% below May 2015.

“As with April results, receivables being down 5% with shipments down 1% from May 2015 and about even year-to-date, receivable levels continue to appear to be in really good shape,” Smith noted.

Inventories in May 2016 were up 3% from May 2015, falling 2 percent from April levels.

“Inventories continue to inch down each month, moving them back to closer in line with current business,” Smith said.

Factory and warehouse employment was up 1% from April to May and up 2% compared with May 2015, when employment was flat in the month-to-month comparison with the prior year.

Factory and warehouse payrolls fell 1% from April 2016 and were down 1% from May 2015, so the increase in the number of employees did not result in increased payrolls.

“Year-to-date, payrolls were up 2% versus last year, down from a 3% increase reported last month,” Smith said.

In summary, Smith noted that sales at furniture and home furnishings stores were up 0.5% in June and up 2.7% over June 2015. Year to date, sales at these stores were up 3.9%, down from 4.1% reported last month.

Smith noted some good news in the face of reported soft sales for furniture retailers. That includes inflation remaining in check, with the Consumer Price Index up 1% over past 12 months.

“And the employment increase in June of 287,000 was more good news,” Smith said. “The stock market continues to give us good news replacing the losses of the UK and the Euro, in spite of the presidential connections and all those accusations thrown back and forth.

“With all that said, from what we heard from manufacturers and distributors, June furniture sales were not that great for some. July has been a bit of a mixed bag with some saying late July has been pretty decent.”

(Source: Furniture Today  Author: Powell Slaughter)